Here’s the thing about wanting to control telecommunications industry tariffs…

Owing to accusations every now and then that there is a dominant player in Kenya’s telecommunications industry i.e. mobile network operator Safaricom, the industry regulator, the Communications Authority of Kenya, commissioned a study that was supposed to do a market review and present its findings.

The market analysis and review, which was presented recently at a stakeholder forum held by the CAK in Nairobi, observed a number of things:

  • Given its expansive countrywide network, Safaricom is a dominant player when it comes to the distribution of network infrastructure like cell towers. As such, the mobile network operator has an upper hand when it comes to being able to provide network coverage to its customers. This means that any new player entering the market is faced with the established countrywide system that Safaricom already has in place and has to compete with it, something that may be next to impossible unless the said player has deep pockets.
  • Each mobile network operator, i.e. Safaricom, Airtel Kenya, Telkom Kenya and others, has an “effective monopoly on termination on its network”. What this essentially means is that each operator has policies in place, dictated by pricing, that encourage users to make more calls within than without i.e. it is cheaper for myself as a Safaricom subscriber to call friends and family within the Safaricom network than it is to call those who are on another network like, say, Telkom Kenya or Airtel Kenya. The same is true for Telkom Kenya, Airtel Kenya and even the other players in the industry. As per the study, no single player is exempt from this.
  • The same is the case for those operators who run fixed networks.
  • Since short codes (USSD) and other mobile phone functionality that is heavily dependent on the SIM toolkit (STK) are usually network-locked, the study found that each player “has an effective monopoly” on the said services.

The study did not find any issues of monopoly and dominance, perceived or otherwise, in fibre lines, IP (internet protocol) transit and others. The problem, as far as the study is concerned, it appears, has everything to do with the rates that operators charge each other for services terminating on their respective networks. These charges are called interconnection rates and, as things stand, are already regulated by none other than the Communications Authority. So, now, the question becomes, how exactly have these same players been able to achieve “monopoly” as stated by the survey?

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The study’s findings are accompanied by a raft of recommendations. The chief recommendation contained in the survey’s reports besides that of sharing of resources like towers is that of the Communications Authority of Kenya going ahead to regulate the pricing of services rendered by mobile network operators to consumers. Here is where the problem lies.

In my opinion, given that all operators already have the equivalent of a walled garden in terms of the products and services that they offer and the rates they charge each other for customers who wish to access the same products and services across those walled gardens are already regulated, what would change if the survey’s findings are implemented “as is”? What would be the impact on, say, a small player getting into the market? I understand the need for infrastructure sharing as this evens the playing ground, more so for small new entrants and the big players only have to share the capacity that they don’t already use, at a fee, but I don’t get the bit where the regulator gets to set the prices, or something of the sort. Ultimately, would this make things any better for the customer or simply open up the customer, like myself and others, to just more players who charge more or less the same rates and with no room for their service provider of choice to pamper them?

I, for instance, have four SIMs from Safaricom, Airtel, Equitel and Telkom. I have had my Safaricom SIM for a decade now (the anniversary is coming this April) and my choice of sticking around for as long as I have is purely informed by the kind of services I get (just fast internet, to be honest) and not necessarily the price I have to pay. If anything, part of the reason why I morphed into the kind of person who loves using over-the-top (OTT) apps like WhatsApp and Telegram for communication is to cut on almost all the costs associated with making calls and sending traditional SMS. It is not like I receive preferential treatment on my current plans on either SIM I use for the same to disadvantage other players (which is why I am always hunting for the best deals). I might be missing the bigger picture here but as far as I am concerned as a consumer, I just don’t get it.

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Telecommunications engineer and blogger, Tom Makau, notes in a very comprehensive blog post, that, “The Safaricom on-net call rates are above the regulator-set interconnection rates and are similar to the rates its competition provides its customers to call into the Safaricom network, in short, Safaricom’s subscribers pay the same rate as competitors subscribers when both call another Safaricom subscriber.”

“CA would be justified in imposing tariff controls if indeed Safaricom’s subscribers paid less to call their counterpart than when competition subscriber calls,” he adds.

What are your thoughts on this subject? Ping me on Twitter.

 

Photo: ecauk.com

Have something that you believe I need to have a look at? Hit me up: echenze [at] androidkenya.com